BEVERAGE manufacturer, Delta Corporation Limited says the country’s operating environment remains complex and challenging, with the implications of next year’s general elections looming large.

Delta is the most valued counter on the Zimbabwe Stock Exchange, with a market capitalisation of nearly US$404 million.

“Zimbabwe’s operating environment remains complex and challenging particularly as the nation approaches the general elections in 2023. It is hoped that the stability of the exchange rate and the corresponding reduction in month-on-month inflation recorded since July 2022, will sustain in the short-term,” chairperson Sternford Moyo said, in the firm’s financial results for the six months ended September 30, 2022.

“There are business continuity and taxation risks arising from the legislation on pricing of goods and services in the current multi-currency system. The group remains focused on exploiting the firm aggregate demand which is largely driven by mining activities, diaspora remittances and infrastructure developments and the increased social activities.”

Delta said there were ongoing investment projects which were expected to be commissioned in 2023.

The taxation risks are seen in Delta’s profit after tax declining by 27% to $18,52 billion for the period from a 2021 comparative of $25,27 billion.

The decline was because of an increase of 231,87% in taxes to $25,94 billion, from a 2021 comparative of $7,81 billion, owing to increases of the current income tax expense and deferred tax of 130,86% and 381,06%, respectively.

Delta’s concerns come over two months after its chief executive officer, Matlhogonolo Valela, revealed that the company was having difficulty in sourcing US$5 million capital despite the firm’s net value.

At the end of September, Delta had $1,41 for every dollar of debt, indicating the firm was barely liquid.

Total assets were $326,94 billion, up from the 2021 comparative of $251,18 billion.

“The Zimbabwe business is witnessing significant recovery despite operating in an unstable macro-economic environment. The key factors relate to an unstable currency, high inflation, a turbid political environment, and a fluid policy framework and the impacts of the global conflicts,” Delta said.

As the festive season nears, the beverage maker is expecting strong consumer demand for its products after posting a 63% increase in revenue for the period under review to $207,77 billion from a 2021 comparative of $127,78 billion.

In a segment breakdown of this revenue, lager beer volumes grew 18%, sorghum beer 14%, and sparkling beverages 22%. Its wines and spirit subsidiary, African Distillers Limited, recorded a volume growth of 11%.

“The Zimbabwe business recorded an increase in the contribution of foreign currency takings which will support the ongoing recapitalisation programmes,” Moyo said.

“There is a focus on aligning the cashflows in each currency. The group closed the period with net cash and cash equivalents of $17,3 billion.”

He said the group remained focused on exploiting the firm’s aggregate demand which was largely driven by mining activities, diaspora remittances and infrastructure developments and increased social activities.

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